Leverage

Quote from exchange1:

I would guess a good prop firm should trade 'everything"- keep traders on a short leash, weed out the bad ones and in the end or over time you will have a diversity and decent return on capital and commission and fee's ?

Was Don saying that trading Pairs and M&A is statistically better than outright directional trading..... pairs and M&A is speculative, I dont see the edge...... there is no edge, the trader is the edge
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As Mav said there really is no "better" - there is only profitable and not profitable, and that always changes. The true edge changes, not only in instruments, but in the way you approach those instruments.

I am saying that of our traders, the pairs guys are doing better than the "lone wolf" scalpers/momentum/RS/and, yes, the "directional" guys. The "contractual pairs" are literally a "lock" of profits. But, again, things change.

There are many edges, as I said. If you have an interest, you may like to read this from a few years ago...it represents some of these changes over the years.

www.stocktrading.com/adaptingnew.html

And, realize that some people do well with change and some don't, it doesn't make one better or worse than the other. Some of my "older" guys will never trader pairs or use our automated programs, but will likely make money for the rest of their lives.

All the best,

Don
 
Hi Don,

I read that article some time ago- it is interesting.

What I dont undestand about pairs is which one to trade and what direction- how does a pair trade differ in risk than any other- I understand one leg is short and other long- and maybe even ratio 60/40- where does speculation begin and end and where do I fing a good pair trade- never mind manage the risk- who finds the "trade" for your guys ?
 
Quote from exchange1:

Hi Don,

I read that article some time ago- it is interesting.

What I dont undestand about pairs is which one to trade and what direction- how does a pair trade differ in risk than any other- I understand one leg is short and other long- and maybe even ratio 60/40- where does speculation begin and end and where do I fing a good pair trade- never mind manage the risk- who finds the "trade" for your guys ?
More...

Oh no, now you've done it. You've opened up the black hole of pair trading.
:eek: :eek: :eek:

Lock the doors, close the windows, hide the children! Just kidding Don, The floor is yours. :)
 
Quote from exchange1:

Hi Don,

I read that article some time ago- it is interesting.

What I dont undestand about pairs is which one to trade and what direction- how does a pair trade differ in risk than any other- I understand one leg is short and other long- and maybe even ratio 60/40- where does speculation begin and end and where do I fing a good pair trade- never mind manage the risk- who finds the "trade" for your guys ?
More...

You'll get a good insight from the "master" on Wednesday. Master is Rob Friesen, not me. There are literally a couple dozens sets of criteria for all that.

Don
 
Quote from Maverick74:

Oh no, now you've done it. You've opened up the black hole of pair trading.
:eek: :eek: :eek:

Lock the doors, close the windows, hide the children! Just kidding Don, The floor is yours. :)
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Step into my dojo, Grasshopper - LOL.


Don
 
Serious question Mav...do you think there is enough interest to do this on Wed, or should be wait a week...I'm good either way.

(and others out there).

Don :confused:
 
Quote from JamesVU2000:

Maverick,


Could you go into further detail why you start your futures traders in etfs?

Thanks
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Because I want traders to learn my system with as little leverage as possible. The ETF's are so small that you can trade without worrying about money. It's simply about execution. Once you are consistent with the ETF's, you can leverage up the size with the futures. And so far it's working!!!!!
 
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